There are over nine million dairy cows in the US, and the vast majority of them are Holsteins, large bovines with distinctive black-and-white (sometimes red-and-white) markings.

The amount of milk they produce is astonishing. So is their lineage. Media reports says when researchers at the Pennsylvania State University looked closely at the male lines a few years ago, they discovered more than 99% of them can be traced back to one of two bulls, both born in the 1960s.

That means among all the male Holsteins in the country, there are just two Y chromosomes.

With the US dairy industry now it in its fifth year of low prices and third year of trade wounds, president and CEO of the National Milk Producers Federation in the US, Jim Mulhern looks at what could come next.

History doesn't repeat itself, but it often rhymes.

I’m reminded of this saying, usually attributed to Mark Twain, as we look at dairy’s price outlook over the next few months. For the first time since before the retaliatory trade tariffs hit last summer and ruined a promising market outlook, real signs of a milk price recovery have again been apparent, just as an improved USDA safety net takes effect to provide at least some relief to struggling producers.

But just like a year ago, trade turmoil – in this case, new and higher tariffs against China – now clouds the market outlook. At National Milk Producers Federation (NMPF) we are doing what we can to ensure that history doesn’t repeat itself, and that even if it rhymes, this time the song needs a better melody.

Now in our fifth year of low prices and our third year of trade wounds, we’re hopeful that the market signals — the worst may be over and better days may lie ahead – are not derailed by a trade war train wreck.

Some positive, hopeful signs:

After years of rising cow numbers dating to 2011, herd sizes have dropped every month since last July, with March’s decline the biggest of the entire period. The steady decline in cow numbers in March finally pushed milk production to levels lower than a year earlier, reducing the supply overhang that has depressed prices.

Futures markets have noticed the tightening. Forecasts for milk prices this year as reflected in futures show a rise of US1.80 per hundredweight over last year, stabilising around US$18 and have been rising by the week.

And finally, sustained improvement in world prices for butter, skim milk powder and cheese are in turn helping lift domestic prices, showing how global demand can benefit US dairy, despite the trade policy and export challenges we now face.

These developments show a sector experiencing an improving outlook, perhaps putting us back on the path we appeared to be on in 2018, when retaliatory tariffs against dairy from Mexico and China disrupted exports to two of our largest markets. The question before us is whether the economic fundamentals today are strong enough to maintain the nascent recovery.

Until trade turmoil is resolved, the battle to open and expand new markets — our best hope for real, sustainable recovery — will be fought with one hand tied behind our back. And the previous half decade has taken such a toll on farmer finances that, over the next few months, many dairies will likely continue to struggle. Help from the market is critically important but it’s inevitable that the economic pain caused to the farm won’t end overnight.

That’s why there is a lot work to do to help producers weather the dairy crisis over the next few weeks and months.

The immediate task is to encourage and guide producers through signup to new dairy programmes, most importantly the new Dairy Margin Coverage (DMC) programme. At a congressional hearing on dairy’s struggles convened on April 30, Minnesota farmer Sadie Frericks told lawmakers she’d be signing up for five years of coverage at the maximum US$9.50 per hundredweight level.

“Dairy farming requires smart business decisions. This was an easy one,” she said after the hearing.

Many other farmers, especially small and medium size producers, need to make the same choice as Sadie’s family. We will be ready to help producers understand their full options, which include not only DMC but other risk management tools, and ways to gain premium discounts and allocate refunds for previous Margin Protection Program premiums provided for under the farm bill passed last year. Please watch our website, nmpf.org, in coming weeks for more information and resources as we head toward the DMC signup date in mid-June.

At the same time, we can’t accept gridlock in Washington’s ability to improve trade policy.

A renewed tariff spat with China cannot be an end in itself, it must lead quickly to a bilateral agreement that lowers tensions and establishes more and better market access.

The Trump administration must lift the steel and aluminum tariffs on Mexico and Canada, and the Congress must ratify the US-Mexico-Canada Agreement this year.

We also need quick resolution to trade discussions with Japan so that US dairy interests are not further punished by tariffs much higher than those negotiated by our European and Oceania competitors. These steps are necessary to provide some measure of certainty and new opportunities for dairy producers, something badly needed after the economic turmoil of recent years.

These are building blocks for longer term recovery that need to be laid down now, when the urgency of dairy’s hard times is still fresh in the public’s mind and concern about them isn’t limited to the dairy sector itself.

If dairy truly is getting back on its feet – we hope this spring’s positive signs show it’s about to happen, despite deeply worrisome trade tensions – then the next step will be to gain traction and move forward, because we don’t want history to repeat itself.

A little rhythm would be nice, but we’re ready to be done with the blues.

• Jim Mulhern is president and chief executive of National Milk Producers Federation in the US. This article is reproduced from the NMPF website - www.nmpf.com

OPINION: The international trading system is facing one of its biggest challenges in recent times.

The building trade war between the US and China and the impasse at the World Trade Organisation (WTO) are two significant global events that demand the attention of New Zealand in its dependence on trade for continued success.

Alongside these two geopolitical power plays runs a creeping tide of protectionism in the form of nationalist inward-looking policies that challenge the global value chain model which is increasingly becoming the future of food.

For NZ it is clear that as a country with a population smaller than Sydney, access to international markets is critically important for our future.

While international debate and brinksmanship dominate the world of trade, NZ is quietly getting on with efforts to secure our future. In the big trade issues at the WTO we have been asked to coordinate efforts to reform this crucially important organisation and make it more relevant for the future.

NZ has taken on the very important role of depository for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 11-member trade agreement. And importantly we are continuing to expand our network of trade agreements globally. We have negotiations underway with Europe for a new trade agreement and preliminary talks with the UK for a new trade agreement with them once the future of Brexit becomes clear.

Our strategy for trade is now firmly anchored on higher value opportunities in the context of the rapidly changing shape of the agri-food sector in NZ. Growth in the production of commodity products from livestock is reaching a ceiling as environmental limits and our response to climate change imposes pressure on traditional farming. The focus on producing and marketing higher value goods from NZ is working.

In the seven years from 2012 to 2019, primary sector export revenue grew 43% to an impressive $46 billion. There is plenty more growth to come with the unprecedented growth in horticulture and plant-based products and new industry development and ongoing efforts in value creation from our traditional industries.

Present day risks to NZ’s strategy are real. The US-China trade war, and the ongoing inability of the UK to finalise Brexit and its separation from Europe have hugely disrupted smaller countries such as ours. China is now our largest trading partner, and disruption in China or the US spills over into international markets affecting NZ exports.

In the European theatre, while the UK needs to finalise its future relationship with the EU, the longstanding relationships built up by NZ companies in this part of the world are at risk as uncertainty remains. Numerous visits by those of us involved in trade and commerce to all of our key markets are important as we continue to reinforce our relevance as a constructive and valuable partner on agriculture and trade issues globally.

As a number of countries retract and implement protectionist policies, our experience has been that open, trade oriented agricultural policies encourage the development of a competitive, resilient and responsive primary sector.

Fifty years ago, about three quarters of NZ’s agricultural exports went to Europe. An active effort to diversify across global markets in the time since then means that this proportion is now down closer to 12%. As a result, producers have seen economic, environmental and social benefits over the longer term.

The good news for NZ is that in spite of the real risks to international trade we are seeing unprecedented demand for nearly all of our agri-food and fibre exports. The quality and integrity of our products are highly valued, but it is the values of NZ and its people that now resonate strongly with consumers.

As we look to a future where demand for food is strongly anchored to the way food is produced and the values of the people producing it, NZ’s future looks assured. In an increasingly challenging international trade environment we need to chart our own path to prevent the actions of others undermining our future.

“We have always viewed GDT as playing a positive role in the international market and now is the right time for DairyAmerica to expand contracting choices with the GDT Events platform.”

GDT director Eric Hansen welcomed DairyAmerica’s return to GDT Events and says during its former participation it successfully sold large quantities of skim milk powder (SMP) to a diverse range of buyers.

“Compared to when they previously participated on GDT, we can now provide DairyAmerica with more choices over who sees their supply information and how their winning prices are published,” Hansen says.

“We look forward to working with DairyAmerica once again and providing access to a truly global and diverse pool of active buyers to achieve credible price discovery for their products.”

DairyAmerica markets 100% of the SMP, nonfat dry milk (NFDM) and buttermilk powder (BMP) produced by its members. It is the single largest US supplier of these products, reaching at least 50 countries.

The potential for organics in New Zealand is being viewed as huge because of dairy farmer competence and excellent growing and market conditions.

That's the thinking from Gary Hirshberg, founder of US organic dairy company Stonyfield Farm in New Hampshire.

Hirshberg told Dairy News non-organic dairy farmers in his region are struggling: 14 - 20% of dairy farms in Maine, New Hampshire and Vermont this year 2018 are expected to go out of business, he says.

“They will fail because corn prices and energy prices are extremely high and the price for conventional milk is quite low.”

But the organic dairy farmers are all making good money. The US overall organic market has reached $60 billion per year and is growing faster than conventional foodstuffs.

He is “bullish” about our organic potential, he says.

“You have the advantage here [for organics] of so much natural grass. Right away you have a distinctive edge over the rest of the world with the greater amount of insulation and you are able to be more productive and more diversified.”

Stoneyfield Farm started as a seven cow operation in 1983 and now has $400 million annual sales, specialising in organic yoghurt. It is now owned by French dairy giant Lactalis.

Hirshberg is involved in companies that produce and export into China. As Fonterra is well aware, he says, because of the pollution in China and one-child families, the Chinese are committed to giving their children the cleanest-possible foods.

“So that opens up a huge market particularly in baby food and infant formula.”

Pointing to alternative dairy products such as sheep dairy, he says they are on the move as a global market. “My friends in the baby food and infant formula business can’t keep up with demand.

“The millennial consumer, young parents, are coming into the marketplace and they want to purchase more conscientiously. They are concerned about pesticides and so on. Emerging millennial consumers the world over are more conscious of these things now. They don’t want additives, antibiotics and pesticides.

“The combination of New Zealand’s ability to grow extraordinary produce and dairy and so forth with that emerging market makes it an exciting future for organic.”

On the wholesale side he thinks NZ companies like Fonterra and Westland are well aware of opportunities in milk powder, whey protein, etc.

Better marketing and communication is needed of ‘Brand New Zealand’, he says.

“You have this extraordinary growing environment. New Zealand right away has an image of green. Where you have to be careful is more and more pressure to open up with genetically engineered corn and feedstuffs. That will work against that overall positive image.

“The opportunities are on the offensive side to grow more value added and do more communicating but also the defensive side to protect the integrity of clean green New Zealand.”

Hirshberg says he has been coming here for 15-16 years and is immensely impressed with the agricultural and technical know-how in a wide range of categories. “The quality of the product is extraordinary here. Americans cannot teach New Zealand much about agriculture.”

But our communicating, marketing and promoting has a long way to go, he says.

Hirshberg held a ‘boot camp’ with Trade and Enterprise NZ for primary industry entrepreneurs this month in Auckland.

He has also invested in a Motueka property where he is working with a number of entrepreneurs to create an onfarm incubator for organics including sheep milking.

New Zealand agriculture may soon feel the waves from intensifying trade conflict between the US and China.

While New Zealand agriculture has remained a bystander for now, it may be impacted by this offshore turbulence if a trade war isn’t averted.

Since March 1, when Donald Trump announced he would impose tariffs on steel and aluminium imports, the US and China have engaged in a war of words, exchanging threats to penalise each other’s exports that have escalated with every round.

The past six weeks have seen several key stages in the skirmishes.

First up, China announced its intention to put tariffs of 15% or 25% on a list on 128 products imported from the USA in retaliation to steel and aluminium tariffs. Many of these were agricultural – products including pork, wine, nuts and fruit.

In addition to steel and aluminium, the US then pledged to levy tariffs worth USD 50 billion on imports of various products from China (largely non-agricultural in nature).

In response, China announced a list of a further 106 US products that would be subject to a 25% tariff. Of these, 33 were Ag related and included the big one for US China trade – soybeans. Also included were sorghum, wheat, cotton, beef, corn and frozen orange juice (Notably, China has not so far targeted dairy shipments from the USA).

Not to be outdone, the US then pledged to look at imposing an additional USD100 billion in tariffs on imports from China with the specific products targeted yet to be decided.

And China came back by threatening to impose a 179% “tariff’ on imports of US sorghum

An important point to note here is that most of these threats are yet to be implemented, and so there is still time to avoid a trade war. Only the tariffs on the Chinese ‘list of 128’ plus the Chinese “tariff” on sorghum are now in place. As such, the US and China have given themselves time to negotiate, and it is still possible that all this could be avoided.

However, given the recent momentum of this dispute and lack of evident negotiation so far, consideration should be given to what it would mean for New Zealand agriculture if all these threats are implemented.

Ironically, in the early stages of such a trade war it might appear that New Zealand agriculture is winning from it. Capital is likely to fly to safe havens, and push our currency down against the US dollar, increasing our competitiveness in world markets. Chinese tariffs will make US products more expensive in China, opening up some additional opportunities for New Zealand exporters of products like wine and beef.

To what extent we benefit would depend partly on how much the US can manage to ship product into the Chinese market via other channels (including Hong Kong), how other competitors respond (such as Australian in beef) and on the redirection of shipments from the US into other markets where we compete (like South East Asia).

However in the long term, Rabobank believes New Zealand agriculture would emerge a loser from a trade war between China and the US. A significant trade war would slow global economic growth, impacting demand for our products. As an export-oriented sector, we would lose much from the shift away from a rules-based system in global trade.

The US may exert pressure on New Zealand not to benefit from any penalty imposed on them in the Chinese market. And if tensions between China and the US continue to rise, it is quite possible that at some point we would be asked to choose which market we trade with between these two giants.

Besides watching with alarm, there are a few things we can do to respond to rising tension between China and the US. Producers, processors and traders have a range of risk management tools they can use, and should consider whether deploying them makes sense for their situation and risk appetite.

More broadly, rising tensions highlight the merit in having a range of trading relationships that diversify our risks between various markets. In the current context, the merits of free trade agreements with markets like the EU and India look stronger.

Of course, this may all yet blow over and look in retrospect like pure theatre. But planning for unpleasant possibilities is what risk management is all about.

• Want to keep up-to-date with the latest food & agribusiness insights? Tune into RaboResearch Food & Agribusiness Australia & New Zealand podcast channel. Most Apple devices have the Podcasts app preinstalled— if not, you can find it in the App Store. These are also available on Android devices.

The US Food and Drug Administration (FDA) can no longer ignore the growing demand that it enforces its own regulations against fake dairy foods.

This is a welcome development for the entire dairy chain, which for decades has done a slow burn as the FDA turned a deaf ear to our complaints that standards of identity for milk, cheese and yogurt are being violated by an expanding list of plant-based imitations that are undeniably not dairy foods.

But now there is a welcome sign that our effort to challenge the mislabelling of dairy imitations has reached a tipping point: the passage of a resolution at the recent biennial meeting of the National Conference of Interstate Milk Shipments (NCIMS).

At an FDA gathering in Grand Rapids, Michigan to consult on milk safety issues with state milk regulators and industry groups like NMPF, attendees voted unanimously to ask the FDA to work with them to ensure the proper use of milk product labelling terms.

State officials have seen the trend all of us in the dairy sector have seen: when the regulatory cop is not on the beat, clever marketers will capitalise on that void and violate long-standing food labelling standards by marketing almond ‘milk’, soy ‘cheese’ and rice ‘yogurt’. And when the latest ‘milks’ are made from pulverised quinoa, algae and hemp, something needs to be done.

Through the NCIMS resolution, state regulators said clearly that they need federal supervision of all products labelled using standard dairy terminology. This wake-up call to the FDA not only should make things clearer for regulators and dairy marketers; ultimately it also will benefit consumers, who face a confusing array of imitation dairy products, all wanting milk’s halo without offering the same consistent level of nutrition.

This same concern is behind efforts on Capitol Hill to pass the Dairy Pride Act, which was introduced in the Senate and House earlier this year.

The DPA is Congress’s expression of distress about the FDA’s passivity in the face of an explosion of ‘alternative dairy’ foods that are in violation of the Code of Federal Regulations. The Dairy Pride Act doesn’t change those standards of identity; it merely requires the FDA to enforce what’s already on the books. We’ve been working on a bipartisan basis with lawmakers to move the DPA forward. And I was encouraged by the recent endorsement of the DPA by the American Cheese Society: “cultured nut products” labelled cheese is yet another disturbing trend that needs to be challenged.

Also fascinating is how the makers of the plant-based imitations are responding to this pressure. On the one hand they’ve dissed the Dairy Pride Act, and the need for the FDA to take enforcement action. But at the same time they appear to be feeling the heat. A few weeks ago they held an industry meeting to discuss what compliance challenges their products may have with the FDA’s standards of identity. Despite their cheeky public disregard of FDA policy, these fake food marketers know they are playing fast and loose with labelling regulations in a way that exposes them to potential legal liability. They appear to recognise that their continuing to rely on the FDA to do nothing is a shaky strategy, placing their brands in jeopardy.

Certainly, there’s a market for dairy alternatives that, while small on a volume basis, is going to be filled by some non-dairy beverages. We have never contended that consumers should be denied that choice. But the purpose of government food standards is to prevent false and misleading labelling.

Co-opting the name, imagery and packaging of real milk, while not offering the same nutritional content, is false and misleading marketing. Other countries do a much better job of enforcing milk labelling terminology, which is why you will not see ‘almond milk’ and ‘soy milk’ on the labels on plant beverages sold in the EU, the UK and Canada. Their makers of plant-based imitations have found other ways to label their products.

One big irony is that if a dairy processor did what purveyors of these fake milks are doing – mixing dried dairy powders (like whey and lactose) with water and selling it in the dairy case as ‘milk’ – consumer advocates and the FDA would be howling “deception!”

Real milk is undeniably dairy. The imitators may try hard to deny their products’ origins by clever formulations and splashy packaging, but the FDA needs to deny them the use of dairy names.

• Jim Mulhern is the president and chief executive of National Milk Producers Federation, representing US dairy farmers and co-ops.

Recently there has been considerable media coverage of the news that New Zealand wine has become the number three imported wine into the US, with only France and Italy ahead of us.

This story featured in a Rabobank wine industry update and was also carried in various media across New Zealand, Australia and the USA – and was even carried on the BBC.

Shortly after this news came the latest export release from Statistics New Zealand showing that our wine exports to the USA have exceeded $500 million for the first time. The data shows wine exports to the USA have jumped 11% ($49 m) in the past year and now represent over 30% of the total value of our exports. The data shows growth in US exports in fact represents 70% of our total export value growth in the past 12 months, and by value US exports are now worth 30% more than our next most valuable market, the UK.

Of course, the success in the USA has not come overnight. Our wineries have been hard at work in the market for many years, while New Zealand Winegrowers has been supporting exporters in-market since the 1990s when David Strada first began working for us. New Zealand wines’ access into the market might not be tariff free but it has certainly been assisted by the WWTG Mutual Acceptance Agreement on Oenological Practices (MAAOP) which means that our wine shipped to the US can be produced in accordance with the New Zealand wine standard rather than the US one.

So the USA is now our most important export market by some margin. But what about the future – are the Stars and Stripes going to be so important to us in five or 10 years time?

For New Zealand the big picture on wine in the US seems to be looking good. The USA is now the world’s largest wine market, it has an appetite for imported wine, the trend is to higher quality/higher value wine of the style that we produce, and there is clearly a growing love affair with New Zealand wine, and Sauvignon Blanc in particular. Additionally tourism is booming between the US and New Zealand, and generally Americans seem to have a very positive view of New Zealand and New Zealanders. We should also take comfort from the fact our exports are no overnight success story – there has been a long hard effort to get where we are today. And even the $NZ seems to be behaving itself at the moment.

Clearly our wineries are responding to this positive environment. At the moment all the anecdotal data suggests that the current growth in vineyard area is being driven by the prospect of increasing exports to the USA, while a growing number of wineries also seem to have personnel permanently based in-market.

But, of course, nothing is ever perfect and there are challenges for us in the US market. For a start, as any exporter to the US knows, talking about the US market is something of a misnomer as it is really 50 different countries as far as wine is concerned. The federally-mandated three tier distribution system certainly makes distribution in the US complicated and expensive. On the flipside, while federal laws may increase the cost of distribution, taxes in general are low.

Our exports to the USA are dominated by Sauvignon Blanc like in no other export market we ship to. Currently Sauvignon Blanc represents 94% of total export volume to the USA compared with, for example, 87% to the UK and 82% to Australia. While the dominance of Sauvignon Blanc is a huge sign of the success, it does represent a risk for New Zealand wine. The old saying, of having all the eggs in one basket comes immediately to mind. So the industry, together with our promotional partners, needs to redouble efforts to diversify our offering in the USA.

Finally recent months have seen a new risk on the horizon – the election of President Trump. Historically the US has been a strong advocate for rules based, free and fair trade. It is on that basis that the US is a signatory of the aforementioned MAAOP which has eased our access into the US market. Since being elected, however, President Trump has stopped US involvement in the TPP which would have given New Zealand wines tariff free US access. That was a blow costing the industry some millions of dollars per year, but what we don’t know is what other steps will be taken by the new administration. US announcements on trade policy will be definitely worth keeping a close eye on in coming months!

Well done to all those wineries who have made the US market such a success story for New Zealand wine. I am firmly of the belief that success to date is only the beginning of the story so long as we continue producing and marketing high quality, distinctively New Zealand wines that resonate with our customers.

New Zealand’s flagship dairy brand NZ Milk Products (NZMP) is making inroads in the US market.

NZMP’s New Zealand origins, trusted name and reputation for first-class quality are paying dividends as US consumers increasingly turn to brands that offer high-quality, safe and nutritious food from trusted sources.

Fonterra USA key account manager Rachel Marshall says ‘grass-fed’, pasture-raised, free-range dairy is experiencing a surge in popularity as people become more health conscious and informed on what they put in their bodies.

“People are looking for natural flavour and goodness, higher nutrient levels and positive effects on the environment, including feeding animals as they were designed to be fed – roaming on pasture. As a result, more and more people prefer a ‘grass-fed’ option, such as those offered by NZMP ingredients, Fonterra’s dairy ingredients business, and are prepared to pay more for them.”

Marshall says that more than 90% of NZMP products are created from New Zealand dairy and our country’s pasture-based farming system offers NZMP a strong commercial advantage in the US.

“By buying NZMP New Zealand dairy ingredients, customers may be able to portray NZMP’s sought-after attributes in their own brands - dairy from grass-fed cows, which is free from animal growth hormone (rBST), and the strong NZMP name.”

She said these attributes may help with customer differentiation on shelf, increased market share, higher margins and enhanced brand loyalty.

One US nutritional company, a long-standing purchaser of NZMP organic milk protein concentrate, promotes New Zealand-linked benefits, such as “100% New Zealand Source”, “hormone free” and “grass fed”, on some of its protein products. The company founder says that sourcing organic protein from NZMP helps their products to be a cut above the rest.

NZMP products are also recognised for their top product quality and performance. Batory Foods, a large US protein distributor reports that their contract manufacturers prefer Fonterra’s milk protein concentrate, citing its quality and ease of manufacture.

Batory Foods Senior Product Manager Vanessa Hodges says, “Manufacturers, who make beverages from milk protein concentrates, say competitors’ products can be more watery and often need the base formula to be modified. As a result, the company selling the end product truly appreciates the NZMP ingredients, as they see them as offering them value over similar competitor products.”

Marshall says that the strength of the NZMP brand reflects its reputation for product quality, genuine ingredients, dairy expertise and safety and integrity of its supply chain, combined with the New Zealand advantage - a formidable mix in any market.

Nathan Guy says some kind of trade deal with the US may still be possible, despite President Trump saying no to the TPP.

Trade Minister Todd McClay is planning to meet his counterparts in the next few months to test the waters for a deal.

“We need those discussions, particularly because the biggest opportunity for NZ exporters is Japan, which is big for horticulture and beef. So we are keen to engage with the rest of the countries [in the TPP] to see if we can still harvest the benefits of the TPP.

“Rather than the whole thing falling over, it is still worth trying to progress a TPP without the US.”

US President-elect Donald Trump has appointed former Georgia governor Sonny Perdue as his new Agriculture Secretary.

Announcing the appointment before he departed New York for his inauguration in Washington, Trump said Perdue will do “great things” as his new agriculture chief.

“From growing up on a farm to being governor of a big agriculture state, he has spent his whole life understanding and solving the challenges our farmers face, and he is going to deliver big results for all Americans who earn their living off the land,” said Trump in a statement.

Perdue said in a statement he would “champion the concerns of American agriculture and work tirelessly to solve the issues facing our farm families in this new role.”

The 70-year-old Perdue, a veterinarian by training, has deep ties to agribusiness. That helped him win over Trump, but it could also pose potential conflicts as he seeks confirmation to lead the sprawling US$140 billion U.S. Department of Agriculture.

As governor, Perdue led the state through two recessions, providing a steady fiscal hand but infuriating fellow Republicans when he vetoed tax cuts. He also became immersed in a battle over whether the Confederate battle emblem should appear on the state flag.

But Perdue also brought a deep religious faith to the job: He resisted efforts to expand alcohol sales on Sunday, and when the state suffered a devastating drought, he led a vigil praying for rain.

Political upheaval in Europe and the US has made the world a much more complicated place to do business.

The UK’s decision to leave Europe and the election of Donald Trump as incoming president of the US has striking similarities, with consequences that will impact New Zealand for many years.

No one should doubt this movement for nationalism, against retaining the status quo. The Brexit referendum and the US election defied the pollsters and pundits, and gave a poke in the eye to the ‘establishment’.

The Trump catch-phrase ‘Make America great again’ could equally have applied to the advocates of ‘Brexit’ seeking to regain control over migration and the bloated EU bureaucracy. In many other countries there are similar sentiments.

The big question is, what does this mean for NZ in its reliance on earning its living via world trade?

Firstly, we need to see how much of the rhetoric will be acted upon. The US is the world’s second-largest exporter after China, so it is inconceivable the US will retreat into its shell and erect barriers that would effectively force it into domestic-only trade. The fast-growing middle class in the emerging nations are prizes the business interests in the US and the UK want to grasp.

In the immediate future, legislation required to pass the Trans Pacific Partnership (TPP) in the ‘lame duck’ session in the US seems dead in the water. And it seems likely that the two years required for all 12 TPP signatory countries to ratify TPP will not see out the course. NZ wants the US in TPP, but a US decision to withdraw or the other 11 members pursuing other options seems obvious.

Suggestions of a renegotiation of some aspects of TPP to appease president-elect Trump raise several complications. No members of TPP obtained everything they wanted in the long, drawn-out negotiations. TPP is like 12 crabs under a rock: it took seven years to coerce all members under the rock, and if one party decides to lift the rock up and renegotiate the terms it is likely all the crabs will scatter.

The most obvious way forward appears to be either concluding TPP minus the US, or seeing it evolve into a broader deal among APEC member countries led by China. Whichever option is pursued, a US withdrawal from TPP would effectively be a withdrawal from Asia-Pacific. Even Russia has gleefully stepped into the breach alongside China to champion other options.

Meanwhile, the path forward for business with Europe and the UK following Brexit needs to be dealt with in two parts. Expectations are high that Europe will continue to progress plans towards a new trade and economic agreement with NZ. Resolutions required to begin negotiations should be passed early next year.

The shape of NZ’s relationship with the UK post-Brexit is less clear. Proceedings to divorce the UK from the other 27 EU member countries will begin early in 2017.

The first priority will be to determine the future trade, economic and people-to-people relationships between Europe and the UK. Third party relationships such as the one with NZ will take longer to work through – probebly several years.

The political challenges of improving market access for NZ exporters have always been difficult. Political changes in the US and the vote by the UK to leave Europe are speed bumps rather than roadblocks in the world of trade.

NZ hasn’t lost markets as the dust settles after change, but there is a lot of hard work ahead of us to retain our relevance in a more inward looking world. Value chains are increasingly global and food insecurity remains a fundamental concern.

The hard work starts now and NZ has a crucial leadership role to play in articulating the benefits of a more outward looking, integrated world.

With the beef industry's focus on carcase traits and selecting for production traits, she is starting to see some leg conformation issues.

"I am concerned that in certain genetic lines of beef cattle a mistake [is being repeated] that the pig industry made back in the 1980s," she says.

"They just selected for rapid growth, big loins and thin back fat. They started getting collapsed ankles where they walked on the claws."

Some of the cattle are getting crooked claw and that matters, she says.

"Some people think they can do all the genetics by the numbers; but there is still a need for visual appraisal of breeding stock to make sure they have sound feet and legs.

"We have to have bulls go out on some rough country; they have to be able to walk."

In breeding, bad can start to become normal. She says don't let it happen in leg conformation.

A group of pig breeders in the 1980s were breeding nasty pigs, but didn't realise how bad they were because they weren't dealing with other pigs.

There is an interaction between genetics and what we can do with animals.

"Take an American Holstein calf and tie it to a tree; it pulls back and habituates and gets over it. Do that to Angus heifers you probably wreck about 10% of heifers. They will not habituate. They get scared and they stay scared and they are ruined."

The controversial free trade deal under negotiation between the US and Europe has hit another snag.

A two-party group of 26 US senators is urging US negotiators to look after farming, including key dairy issues, in any free trade agreement with the European Union.

In a letter to US trade representative Michael Froman the senators said the US share of the European agricultural import market is shrinking due to tariff and non-tariff trade barriers.

"A final [trade] agreement that does not include a strong framework for agriculture could have a negative impact on congressional support for this deal," the senators say.

Talks on the Transatlantic Trade and Investment Partnership (TTIP) bogged down after 13 rounds of negotiations over nearly three years; the gulf between the two sides was highlighted by a massive leak of documents which revealed "irreconcilable" differences on consumer protection and animal welfare standards.

All 28 EU member states and the European parliament will have to ratify TTIP before it comes into force; France says it is against regulated trade.

For US dairy farmers, one key issue is the EU's efforts to capture the sole use of food names long considered generic in their countries.

Decades after parmesan, feta and asiago became household favorites in the US, Europe now argues these names can only appear on cheeses produced in Italy and Greece, blocking US sales of so-named products to the EU and affecting sales to foreign markets.

Also, the EU is seeking a leg-up on US food competitors by insisting the US government shoulder the costs of enforcing protection for hundreds of European names in the US domestic market.

"In 2015 we had a record US$12 billion agricultural trade deficit with Europe, due largely to barriers erected specifically to limit exports of dairy foods and other US farm products," Mulhern says. "Any successful European free trade agreement must break down those barriers. The US needs to soundly reject the EU's desire to impose new barriers to competition worldwide and to create taxpayer-funded advantages for its producers in our market. We should be using TTIP to level the playing field."

Tom Suber, president of the US Dairy Export Council, says the opportunity to grow dairy exports and re-balance the two-way trade deficit should be a top priority in TTIP negotiations.

"US negotiators should not conclude a trade agreement with the Europeans without addressing the serious European trade barriers facing the US dairy industry, including restrictive certification requirements and restrictions on generic cheese names," he says.

"Names like feta and parmesan belong to everyone, not just a small group of producers in Europe."

The US market is one of six growth regions pinpointed in Arla's strategy 'Good Growth 2020'.

The goal is to become a top 10 player in the retail cheese market by growing its business beyond the deli section into the dairy aisle, where 92% of US cheese sales take place.

A newly launched big bet in the dairy aisle is Arla branded cream cheese, which has no artificial growth hormones, artificial ingredients or flavours.

"US consumers are increasingly looking for food products they can feel good about serving and consuming from a better-for-you standpoint," says head of Arla Foods USA, Don Stohrer Jr.

"This is exactly the position we have created for the Arla brand with its authenticity, transparency and great taste. It's an attractive position that doesn't now exist in the US dairy aisle or the cheddar segment. Our expectation is that the new cheddar products will create a halo effect for the cream cheese and other Arla branded products."

The joint venture will be owned 70% by DFA, which also holds the management role, 20% by Arla and 10% by the eight farmers who supply the milk. Thirty people are expected to be employed.

On-site construction will begin later this year, to start producing in the autumn 2017.

Citing the planting, growing and harvest of a wheat crop, the company says that if all the vehicles in the world's wheat growing areas used Ultraflex tyres, production would rise by about 23 million tonnes.

The US Department of Agriculture says this quantity would feed everybody in the US (319 million) and is equivalent to Germany's annual wheat production.

The key benefit of Ultraflex technology is that it reduces tyre pressures from the norm, protecting the ground from rut formation and ground compaction. This encourages the permeation of air and water through the soil profile, improving plant uptake of nutrients.

The larger footprint of Ultraflex also helps spread weight over a larger area, as well as improving traction and reducing wheel slip, which reduces time in the paddock, improves productivity and reduces fuel usageUltraflex is available for vehicles used throughout the production cycle with AxioBib, XeoBib and YieldBib for tractors, CereXbib for harvesters and CargoXBib for trailers.

US ranchers are letting cows gorge in feedlots for up to 60 days longer than usual.

And this is translating into good news for burger lovers: the price of beef is expected to fall soon, ending its run of record high prices just in time for the outdoor meat-charring season next year.

Feedlot owners are taking advantage of cheap grain feed to minimise losses by keeping cattle in feedlots longer, letting them put on weight so they fetch higher prices. The gluttonous cattle are thus getting fatter than ever—last month the average beast sold to slaughter weighed 630kg, an all-time high.

US company, Milacron Holdings Corp, says its Uniloy business and Consolidated Container have together developed a lightweight range of retail milk packs in gallon, half-gallon and other sizes – called Dura-Lite.

Dura-Lite containers are strong, appealing and compatible with the supply chain, its makers say. They have radiuses, symmetrical ribs and angles that work together to reduce weight without sacrificing bottle performance or aesthetics.

The Overseas Investment Office needs more resources, but a reform of legislation is not on the cards because of lack of political support, Prime Minister John Key says.

The Overseas Investment Act and the way the Overseas Investment Office works is not perfect, he told a Chinese Business Summit in Auckland.

"They are under-resourced in my opinion.... I don't think they are deliberately trying to do this, but the length of time it is taking to make a decision is far too long.

"The only applications going in are the ones where the legal advice is a very high probability of success. So when people say the office approves nearly everything put in front of it, that's true, but that's because it has already gone through a filter process.

"But nevertheless it is far too long.

"The Government's view is we should raise the costs and fees and the applicants seem happy with that and pour money into the offices which make the decisions."

Key said if you wanted him to change the Overseas Investment Act, which a lot of people would do, to at least have more clarity, "show me where I can get the [political] numbers from. Only ACT would support us." United Future, the Maori Party, Labour, New Zealand First and the Greens would not.

He also claims the decision two ministers made to turn down the Shanghai Pengxin bid for Lochinver, which they made without consulting others, was nothing to do with the politics.

The Government has said 'yes' to the OIO for a whole range of things such as Shanghai Maling buying into Silver Fern Farms "with a whole bunch of people jumping up and down", Bright buying into Synlait and Shanghai Pengxin buying into Crafar farms. He said all of them had a degree of pushback, but not a single one moved the polls.

"I think a lot of people jump up and down and make lots of noise but I don't think they moved our polls in any way so it is consistent with the Government's view that we are not going to get rich selling things to each other."

We will get wealthier and provide more jobs with two-way investment, he said.

"We are not saying 'no' because they are Chinese or American or anybody else.... We will say 'yes' or 'no' on the merits of the case, on the basis that any decision we make could be judicially reviewed both ways. But it is not about the public not liking it."

Investment by China into NZ and vice versa is extremely low, Key said. When approval was given to buy the Crafar farms all hell broke loose in the political sense. At that stage they went away and looked at it and there wasn't a single other farm registered to a Chinese owner in NZ.

"In fact, despite what people might want to argue, there hasn't been a massive investment in land in NZ from China. There has been a lot from Australia, US, Netherlands, some of the German pension farms and Scandinavia – but not from China.

"Two-way investment really matters and is the next step in bringing our relationship to the next level."

Fonterra will sell its 50% interest in DairiConcepts, the co-op's US joint venture with Dairy Farmers of America (DFA).

DFA will purchase Fonterra's 50% interest on 31 December 2015 for a price of approximately $196 million (subject to foreign exchange conversion adjustments and customary closing adjustments).

The DairiConcepts partnership was established in 2000 when Fonterra contributed its US dairy/cheese flavours business and DFA contributed a number of cheese and cheese-powder assets.

Fonterra chief executive Theo Spierings says the transaction did not impact the longstanding relationship with DFA. Fonterra and DFA were both founding members of the Global Dairy Platform and had a shared interest in promoting the growth in global dairy consumption and the further development of cooperative dairy farming. Fonterra had decided to exit the partnership as it was considered to be a non-core component of its strategy.

"We still value our relationship with DFA, however, as the DairiConcepts business is almost completely stand-alone operationally, we have agreed that it would be simpler for one of the partners to buy the other out.

"The US remains a key part of our global multi-hub strategy and this divestment does not prevent Fonterra from exploring new growth opportunities for this milk pool.

"A long-term supply agreement we have reached as part of the sale, means our US milk pool will continue to meet value add customer demand through our NZMP brand."

Key drivers of this lift are the a deteriorating milk production outlook for New Zealand and reduced GDT offer volumes, but the speculation is that these alone may be insufficient for a sustained recovery.

Hence it was not totally unexpected when the GDT Price Index fell slightly in late October, signalling the possible end of additional demand brought on by the bottoming of the price cycle.

Ultimately needed to see prices meet or exceed 'average' levels of recent years is market rebalancing -- elusive for much of the past 18 months as sluggish demand has met persistent supply growth from the biggest exporters.

The removal of milk quotas and a reduction in sales opportunities because of the Russian import embargo have placed Europe at the centre of the oversupply facing dairy markets.

Although European milk production has not grown as rapidly as some had expected in the post-quota period, it has been sufficient to weigh on global markets. Europe's growth of 1.1% (976 million litres to July 2015) represented roughly half the total increase from the world's four major exporting regions for that period.

With a weaker currency and mountains of product to sell, European exporters have competed aggressively on price in traditionally Oceania-dominated demand regions such as Southeast Asia.

There has been no wholesale slowdown in production growth in Europe but Oceania is a different story. Australian production is up 3.1% season-to-date, although dry conditions are causing growth to slow.

Of particular note at the regional level, warnings of a sharp contraction in NZ's milk intakes are beginning to be borne out. September numbers from the Dairy Companies Association of NZ reveal a 7.5% fall, relative to September 2014.

Fonterra has reported a milk flow peak about 4% lower than last season, with some year-on-year recovery evident during October. High culling partly explains the lower production; the weather during the spring peak has so far been favourable.

A full season decline of up to 10% has been flagged by industry observers; Fonterra is forecasting its own full season intakes will be 5% below last year.

In the US a milk production response is evident also, albeit less dramatic. Growth is at its slowest since December 2013: September output was 0.4% higher than the same time last year (7.5 billion litres), compared to a 1.4% increase year-to-date.

Growth has come from a strong domestic market helping to insulate the US dairy industry from global price movements. This and a stronger US dollar caused exports to fall sharply. But rising global markets have brought domestic and international prices closer together, hence US export offers are increasing.

Consequently, while Oceania supply-side issues are beginning to pressure the prices, this is being mitigated by European and increasingly US competition, withthe continuation of northern hemisphere production growth likely to provide some comfort to buyers who don't specifically require Oceania product.

While prices seem to be finding support at current levels, further short term upside appears limited and a period of range-bound trading around the current level is likely.

Production trends during the southern hemisphere spring peak will help provide further direction, but a supply response in the northern hemisphere and a broader demand recovery are what the market needs. Expectations are for that to happen mid 2016 at the earliest.

Fonterra's grip on the New Zealand ice cream market is facing a new test.

It has been confirmed that US ice cream maker, Ben & Jerry's is setting up shop in New Zealand.

A statement from Ben & Jerry's says the "much anticipated super delicious ice cream with signature chunks & swirls" will be available from early December in a Ben & Jerry's scoop store in central Auckland.

"The store opening will be followed quickly by a selection of delicious pints on sale in a number of premium retail outlets," it says.Kiwis will be treated to 18 iconic Ben & Jerry's cone-coctions from day one – including Chunky Monkey and Phish Food, Strawberry Cheesecake and Choc Chip Cookie Dough.

Fonterra is the market leader in New Zealand with its Tip Top brand of ice cream and products. Global company Unilever, owners of Ben & Jerry's, distributes Streets brand ice cream in NZ.Unilever says more information will be made available in the coming weeks on Ben & Jerry's arrival.

The company's story began back in 1966, when in a school gym class, Ben Cohen and Jerry Greenfield found they hated running but loved food. Years later in 1978, armed with a $5 correspondence course in ice cream making, they open their first scoop shop in a dilapidated gas station in Burlington, Vermont, US.

The duo soon became popular in the local community for the finest all-natural ice cream. Ben had no sense of taste so he realised on what he called 'mouth feel', so big chunks of chocolate, fruit and nut became their signature. While they disagreed at times over the chunk size, they did agree that they wanted to enjoy themselves – as Jerry put it 'If it's not fun, why do it?'

In the early days the boys were pretty bad at bookkeeping. After two months they closed the store and hung a sign that said 'We're closed to figure out whether we're making any money'. And they weren't. But they learned a lot and by 1979, began wholesaling pints of ice creams out of Ben's VM campervan. The rest, as they say, is history.

The Republican presidential front-runner who appears to wear a dead possum on his head – Donald Trump – has finally managed to get agriculture into the US political debate, but not in a good way.

Responding to a recent poll that had his rival Ben Carson leading the Republican field at 28%, and Trump slumped to second place with 20% in the Iowa caucus race, 'the Donald' sent out a snide tweet stating: "Too much hash creates issues in the brain." In other words, he was blaming Round-Up sprayed on crops in the state for voters' support of his rival. However, after copping bad press for his comment, Trump did what any good politician would do – blamed an unnamed staff member. Sure, Don, it was the intern.

The message intended to attract young people into the agri sector is unappealing and the wrong people are involved in that messaging.

That's the view of John Brackenridge, the head of Merino New Zealand and the leader of the chief executives' agri-bootcamp scheme that takes high-flyers to the United States.

He told Rural News that NZ is missing the point in this area and is stuck in a paradigm of traditional education and traditional approaches.

"For a start, I think the people who should be doing the messaging are the young people who are coming into the industry and who have found the excitement and are building their careers."They are possibly people who, when they were studying – at university or wherever – had no idea about the possibilities the agri sector had to offer. A lot of conventional thinking is that you have to determine where your career will be in a certain industry right from the start -- even at primary school. But I'm not sure about this."

Brackenridge says a lot of the people he's employed don't have agriculture-related degrees; they are from a variety of disciplines including as social science. One person he hired came from such a background and has now discovered the primary sector and is working 80-hour weeks because she loves the industry.

Many young people are being attracted to the agri sector because it links in with their values such as sustainability, he says.

"Sure we are employing a lot of graduates from the likes of Lincoln and Massey, but importantly we are also employing them from other places: one of our staff has a degree in anthropology. Through our connections with Stanford University we have students from there coming out and setting up programmes here.

"This is because they are finding out – from their points of view – that the primary sector here is quite sexy. When you come out of Stanford with a masters or a PhD the world is your oyster. What we have to offer in this country is hugely appealing because many young people are concerned about the environment, where products come from and what attributes and benefits they have."

Now is the time to be more disruptive in our thinking, Brackenridge says. NZ is too 'linear' in its approach to attracting young people into the agri sector. The sector needs to get success stories about young people better publicised and in front of the public at large.

He says the skills and qualifications NZers will need in the future will be quite different from those of today. To achieve the necessary innovation NZ needs people with disruptive thinking, fresh ideas and a wide range of skills – not just science.

"But really important is that businesses need to step up and change from just being commodity shippers, into businesses that embrace innovation," Brackenridge adds. "We need to come to terms with the type of language that young people use such as the importance of digital and connect with our young people."

And NZ needs to leverage off its overseas connections and attract young graduates from the likes of Stanford University.

Millions of people would have been healthier if they had consumed milk rather than used milk substitutes, according to an article in The Washington Post.

The article says previous science quoted by US government agencies to warn people off whole milk, including butter, was wrong. That advice was simplistic and the notion that dairy products cause heart disease was incorrect, it says.

Fonterra chief technology officer Dr Jeremy Hill says this article will serve to support well known science about the benefits of dairy products. This is recognised by the McDonalds restaurant chain in the US, which this year returned butter to its menu and removed dairy substitutes.

"The vast majority of the population doesn't read scientific and nutrition journals; they read newspapers either online or in print. [Papers] like The Washington Post get picked up broadly and are important in that respect. It's a way of popularising science in a way consumers can understand. The article, written from a perspective of a layperson, makes it's quite understandable."

Hill says the most important aspect of the science, and its publication, is that it removes barriers to dairy products in the minds of consumers. Dairy is recognised as providing a lot of valuable nutrients, he says. It's taken a long time for the science to become solid enough to change opinion.

"The science has been there for a long time but it's now gained so much momentum that it's changing policies and ultimately it will change consumer purchase decisions. From a sensory perspective milkfat is fantastic: its creaminess is desirable and the nutrition that comes with it makes it a winner. Who would have thought McDonalds in the US would completely change over to butter from substitutes?"

Hill says publicity on the diets of elite sports people will also help cause a shift towards greater use of dairy products. Many key influencers are helping change public opinion in favour of dairy products.

"Celebrity bloggers have become important in this respect -- rock and movie stars and other individuals who influence public opinion; as they adopt change they will drive this even further. But ultimately we need the right nutrition policies and advice from government channels, medical and nutritional advisors.

"Inappropriate barriers to consumer choices on nutrition" must be removed and the "support of key decision makers" gained, Hill says. "That means using a raft of formal and informal channels to influence consumers."

Hill says Fonterra has worked with many researchers and scientists publishing on the benefits of dairy products. The co-op will keep aligning its marketing strategies with this research.

"There is a widespread perception that it's a thin market of Chinese and Hong Kong investors who are buying NZ dairy land," he says. "In reality, though, the market has a broad base of investors."

China accounted for only one of the 24 transactions for dairy land approved by the Overseas Investment Office (OIO). That was the major acquisition of Synlait Farms, which accounted for 12% of hectares sold and 21.3% of money paid.

Earlier this year, the Government rejected an $88 million bid from Pure 100 Farm Ltd, a subsidiary of Chinese-owned Shanghai Pengxin, to buy Lochinver Station because the benefits to NZ were not "substantial and identifiable".

A Shanghai Pengxin-controlled company also recently withdrew from of a $42.7 million deal to buy a cluster of Bay of Islands farms, saying it will not put the sellers through the "frustration and pain" of a Lochinver Station-type experience.

Dakang New Zealand Farm Group, 55% owned by Shanghai Pengxin, applied to the Overseas Investment Office in April this year for consent to buy 3300ha from Northland's Pinny family.

Six months on, the company said it had yet to receive advice that the OIO had considered the sale or made a recommendation to the Government.

Dakang chief executive Gary Romano said the decision to cancel the Pinny sale and purchase agreement was "somewhat" based on the company's experience with its 2014 sale and purchase agreement to buy the Lochinver cattle and sheep station near Taupo.

Key findings from KPMG

The US accounted for 55.9% total freehold hectares purchased by overseas investors in 2013-2014. This was followed by China (12.0%), Sweden (6.1%) and the remainder in 11 other countries.

The US accounted for 26.5% of payment for dairy land, followed closely by China (21.3%).

Diplomatic representatives speaking yesterday in Auckland believe there is a strong chance of global agreement in the upcoming climate negotiations in Paris in December.

This is the first round of global talks on climate change since an unsuccessful round in Copenhagen in 2009 – but this time the US and China are ready to come to the table.

Professor Dave Frame, director of NZ Climate Change Research Institute at Victoria University, says agriculture could be left until later in climate change action giving the first focus should be on the reduction of carbon dioxide (CO2 into the atmosphere).

However agriculture is clearly a sector where New Zealand could show some leadership, says Frame.

His comments – which he admits a lot of scientists would strongly disagree with - were made at the two-day Australia-New Zealand Climate Change and Business Conference which continues today in Auckland.

Climate change goes back to global negotiations in Paris in December and French Ambassador to New Zealand, Florence Jeanblanc-Risler opened the session stating, "the world is on track for a robust agreement at COP21 in Paris".

Tim Groser, NZ Minister for Climate Change agreed, stating, "the outlook for Paris negotiations is optimistic and momentum is moving in the right direction."

Dr Adrian Macey, senior associate at the Institute for Governance and Policy Studies at Victoria University and former New Zealand Climate Change Ambassador, also commenting on the significant differences between the lead-up to these negotiations and the lead-up to the unsuccessful Copenhagen meeting. "At this time in the lead-up to Copenhagen, there were 300 pages of text with 3,000 square brackets. This time, we have approximately 20 pages of text with maybe 300 square brackets".

A key question for the negotiations is whether or not any emission reduction commitments made will be legally binding. "We need to avoid compliance-centric, heavy top-down approaches to addressing climate change so as to facilitate participation." says Groser.

Michalis Rokas, agreed that obtaining legally binding obligations will be "very difficult to achieve and some countries think they are not necessary."

Macey highlighted the need for a global response to meet the required emission reduction and, given this imperative, it may be necessary to prioritise engagement over legal commitment.

Conference convenor Gary Taylor earlier proposed New Zealand should have a climate change forum similar to the Land and Water Forum.

Even with the ANZAC relationship dating back 100 years, it seems the lack of commitment by our Australian cousins cost New Zealand's dairy sector more meaningful gains from the recently concluded TPP negotiations.

NZ special agriculture envoy Mike Petersen told Rural News that if Australia had stood with New Zealand there would have been a much better dairy deal.

"Unfortunately the Aussies did not stand with us over dairy in Atlanta (where the TPP was concluded earlier this month). Their focus was on sugar, biologics and other matters," Petersen says. "If we'd had the Aussies onside, we'd have got a better dairy deal, but it was too hard with just us (NZ) against the combined and heavily protected dairy sectors of the US, Canada and Japan."

Despite the less-than-ideal outcome for dairy, Petersen, in Atlanta with the rest of the NZ negotiating team, believes the TPP has delivered an "outstanding" result for the NZ primary sector.

"It is an outstanding deal for New Zealand. We have basically gained free trade access for the majority of our primary sector products – with the exception of dairy and some beef – to 11 new markets with a population of 800 million or 40% of the world's trade.

"We now have access to 11 new markets tariff-free for fruit and veg, sheepmeat, seafood, wine and forestry, and the next best thing for beef."

Petersen says critics of the deal fail to recognise that the TPP has given NZ the equivalent of free trade deals with countries we could never have expected to sign up to bi-lateral deals.

"The US, Japan, Canada and Mexico would not be interested in doing a bilateral with a tiny country of 4.6 million people. They would ask, 'what's in it for us?', and they'd be right," he explains. "Through the TPP process we now have free access for all our primary products—with the exception of dairy and some beef – into these four markets and seven others."

Meanwhile, Petersen says it would have been untenable and economically stupid for NZ to walk away from the TPP.

"The TPP would have gone ahead without us – it would have been 11 countries instead of 12," he says.

The US dairy interests will realise within five to 10 years they got it wrong by opposing dairy tariff removal in the Trans Pacific Partnership (TPP) negotiations, says Fonterra chairman John Wilson.

Market access for dairy products will go back to the negotiating table for TPP countries within five to 10 years, Wilson predicts. Dairy negotiators in TPP understood the benefits "but were not brave enough to show the leadership to transition their sectors into total trade elimination," Wilson says.

Other countries will want to join the TPP and Wilson predicts within five to 10 years dairy tariff elimination will be looked at again.

"The problem is we have very strong protectionist lobby groups focused on how dairy, for example in the US, has operated over the last decade rather than what the potential is for the future," Wilson says.

"The dairy industry in the US will look on this in five or 10 years and recognise the TPP got this wrong -- that they should have been driving far harder for total tariff elimination alongside New Zealand and Australia. They are already the biggest exporter within the TPP region; they export more than we do in dairy within the TPP region.

"They already export 15% of their production; that is already about three quarters of NZ's production, so they are already a significant exporter globally as well.

"So, a huge opportunity for their exporters; but their exporters tend to be more on the West Coast and the protectionist group is more in the Midwest or towards the north-east and, given how difficult this whole negotiation became politically -- not just in dairy but in autos, biologics, tobacco, sugar and rice -- that ambition of tariff elimination unfortunately hasn't won the day."

Regardless, it is important that TPP has been concluded and must now be enacted, says Wilson. "I have great confidence that within five to 10 years our negotiators will be renegotiating market access because there will be other countries that want to enter TPP and the political and economic environments will be different. There is a greater chance you will continue to get elimination of tariffs at a greater rate than at the moment."

NZ's beef sector got a good outcome because they worked with the other beef sectors around the world particularly led by the US cattlemen, says Wilson. They came up with a good agreement among themselves and were able to work alongside their negotiators.

"While we tried hard to do that with the US dairy industry, unfortunately the US dairy industry took a protectionist approach ultimately, rather than showing leadership on tariff elimination," Wilson says. "That's not unique to dairy; it happened in other cases, for instance sugar."

Wilson says the principle of tariff elimination is now deeply embedded. They have eliminated tariffs over time through many product lines, but not all, in a number of countries.

"We've got to continue this conversation and this pathway. With all trade negotiation, it is not necessarily the next 10 years that benefit, it is the next half generation of people who come along, particularly farmers who will benefit from it, and that's the importance of continuing this work."

Wilson says there won't be any details out for a while – the text is not due for a few weeks. The negotiators say there will be about $100m more of dairy trade for NZ.

"While we have strong indication from our negotiators of what the content is, until the final text has all been thrashed out we don't actually know exactly what the outcome is," he says. "We know what the direction of travel is, but the exact tonnage and the exact time period, and exact product lines -- we don't have detail of those yet.

"The good news is there is more access for a whole lot of NZ primary products – wine, beef and a few others.

"For dairy unfortunately we are in a position where tariff elimination was what TPP was all about but over the last two years, tariff elimination was taken off the table by Japan, Canada and the US industry.

"The deal is disappointing because we haven't got total tariff elimination and we've only got it on a number of product lines, but it is still a better position than we were in last week."

Skellerup Holdings made $21.9m after-tax profit in the last financial year; NZ, Australia and North America generated about 25% of the revenue, followed by Europe then Asia. The agri division which makes dairy rubberware, animal hygiene products and technical footwear recorded pre-tax earnings of $22.1m, up by 2% on flat revenue of $80.5m.

"Our focus on international markets enabled the agri division to record an increase in earnings and overcome the impact of a reduced contribution from a NZ market buffeted by lower dairy pay-outs," says Cushing in the annual report.

"Significant growth was achieved in the US, China and South America. Although results in NZ were slightly softer than in the prior year, sales of dairy rubberware during the winter peak, when much of the onfarm and shed maintenance work is done, were relatively solid."

Cushing says the demand for protein remains a key driver of the global dairy industry and that demand should continue for the medium term.

"While world prices for dairy commodities remain volatile and are presently below the levels of recent years, long-term prospects for the industry are good," hesays. "US milk production continues to increase, as does the demand for dairy products in developing countries."

He says deregulation in the dairy market in Europe and the inevitable removal of the sanctions on Russia will provide new opportunities for growth. Many countries in South America are continuing to develop their dairy capability also.

Cushing says a highlight of the year is the excellent progress being made at its new Wigram plant; $15m has been spent on the project this year and $25m more is earmarked to complete the construction and fitout.

"As shareholders will appreciate, our Woolston factory has been the cornerstone of our agri division for some 75 years. The new facility sets us up to stay at the forefront of dairying best practice for the next 75 years and beyond."

Agri division general manager Guy Keogh says with the new dairy rubberware development and manufacturing facility being built at Wigram they had the opportunity to lay out the ideal design. "Our business has changed significantly over that time and, while we've continued to manipulate and adapt the current site for our needs, a purpose-built facility is going to provide opportunities that will benefit customers and staff."

BEEF + LAMB New Zealand (B+LNZ) is working together with its sheep farming counterparts from the US and Australia to get Americans eating more lamb.

B+LNZ's Central South Island director Anne Munro has just been at the annual Tri-Lamb Group conference in Nevada with B+LNZ's North America manager Terry Meikle and Federated Farmers' Meat & Fibre Industry Group Chairperson Rick Powdrell. Representatives from the Sheepmeat Council of Australia (SCA) and the American Sheep Industry Association (ASI) also took part.

The Tri-Lamb Group was established in 2004 to grow demand for sheepmeat in the US, mainly by increasing consumers' awareness of lamb's nutritional value.

"This collaborative marketing campaign has had real impact in the US market, but there is definitely room for us to be doing more. Americans still eat a relatively small amount of lamb per capita, so we're working together to do what we can to increase that," Munro says.

The conference agreed that the joint marketing campaign would put more of an emphasis on social media in 2015, targeting nutritionists and dieticians as well as lamb suppliers and retailers.

The Tri-Lamb Group also agreed to work more closely on other areas of common interest, including better engagement with young sheep farmers, raising the profile of sheep farming, and collaboration on research around sheep predators.

"Building better relationships with the likes of SCA and ASI helps us understand the viewpoints of sheep farmers from other countries, and to learn from them. For example, this year we talked a lot about how sheep farmers in each of our countries deal with droughts – something that is obviously relevant for Kiwi sheep farmers right now," Munro says.

Lamb

Beef+Lamb

sheep

US

]]>infomail@ruralnews.co.nz (Pamela Tipa)General NewsFri, 30 Jan 2015 14:25:44 +1300Massive cattle losses in UShttps://www.ruralnewsgroup.co.nz/rural-news/rural-world-news/massive-cattle-losses-in-us
https://www.ruralnewsgroup.co.nz/rural-news/rural-world-news/massive-cattle-losses-in-us THE LIVESTOCK death toll from a blizzard in the American west is put at more than 20,000 head, but the disaster has gone barely noticed in a country focused on the government shutdown and the debt ceiling threat to its financial reputation.

The snowstorm buried eastern Wyoming, southern Montana, western South Dakota and northwest Nebraska in 50cm of snow and is being described as one of the worst disasters ever for cattlemen in the region.

Early estimates put the number of cattle killed in the region at 60,000-100,000 head.

South Dakota state veterinarian Dustin Oedekoven says total confirmed cattle deaths in his state are about 2000 head and he expects the final total will be 10,000-20,000 head.

“Everybody wants to know the number, but truthfully we don’t know,” Oedekoven told the Capital Journal newspaper in Pierre, the state capital. “We won’t know for some time.”

Snowdrifts covered fences and cattle were able to wander at will, making it harder to get a casualty count.

Oedekoven says the death toll was not uniform across western South Dakota and while some ranches lost 50% or more of their herds, others lost just a few animals. Losses in Nebraska were put at up to 3000 head.

North Dakota Senator Heidi Heitkamp told the US Senate the cattlemen urgently need help because the livestock indemnity programme expired when the farm bill expired at the end of September and Farm Service Agency offices are closed because of the government shutdown.

Heitkamp says people mistakenly believe one cow is just like the next and can be replaced.

“The herds are the product of years and years of selective breeding, years and years of working to improve the quality of their herd and to meet different specifications in the market,” she told KFGO Radio in Fargo. “It’s not an exaggeration to say they’re more than cows. They contain an intellectual property component that is not easily replaced.”

A fund has been established by state livestock groups to help affected cattle producers.

“With the government shutdown and no farm bill in place, we need South Dakotans to help their neighbours,” Gov. Dennis Daugaard says. “Many concerned individuals are wondering how they can help, and this fund will provide a way.”

Heitkamp says it’s time for congress to do something.

“We have got to get the Congress back working for the American people, particularly for the hard hit farmers and ranchers of southwestern North Dakota and of west river South Dakota.”

The beef cattle industry ranks as the leading agricultural industry in South Dakota with about 17,000 ranchers and cattlemen producing 3.7 million head of cattle a year. – Alan Harman

The United States dairy industry is turning its attention outside its own borders and could emerge as a significant competitor to NZ and Australia in international export markets, a visiting global dairy expert has cautioned.

Rabobank’s New York-based global dairy strategist Tim Hunt – recently in Australia presenting to local industry – says the United States, long focussed on its own domestic market, is reorienting towards the global market place, attracted by the allure of better returns across some product categories.

Until recent times, the entire US dairy industry had been dedicated to servicing its own lucrative and growing domestic market, with countries like NZ and Australia trying to gain access through bilateral trade agreements.

“Historically, the US dairy industry lived in a fortress,” Hunt said.

“It had a very large, affluent domestic market, which grew strongly and had very high prices. It was protected from the international market by high tariff barriers and had government support.

“But US dairy market growth has slowed in recent years, while the commodity price boom has seen international prices rise above domestic US market prices, making export returns more alluring for US dairy players.”

This, in effect, was turning the US from ‘the hunted to the hunter’ as its dairy industry sought to compete in the more attractive global marketplace, Hunt said.

“The US dairy industry is becoming increasingly cost competitive in export markets due to a combination of its large-scale farm operations, easing feed costs and a lower US dollar, while it is also beginning to align products to suit the global market,” he said.

Mr Hunt said US dairy exports had already begun to steadily grow as a result, with, for example, milk powder exports increasing from about 300,000 tonnes in 2007 to 500,000 tonnes in 2012, and cheese exports going from about 100,000 tonnes to more than 250,000 tonnes in the same period.

But Hunt added it was not all smooth sailing for the US as they reoriented towards world markets, with a number of obstacles to overcome.

“With the entire US dairy industry having developed to service the domestic market, they are not aligned to the requirements of exporting dairy,” he said. “Essentially, they have the wrong plants and they make the wrong products for global market exports. In addition, US regulation makes exporting hard for the industry.”

And there are also market access and customer relationship issues, Hunt said. “The US dairy industry doesn’t have good access to several important markets and they also have relatively weak relationships with offshore customers,” he said.

However, progress is being made towards the US becoming a better exporter. “Plants are being tweaked to make export products and new plants are being built to service export markets,” Hunt said.

“Market access is improving and relationships with offshore customers are being strengthened.”

And with Australia largely having lost its cost of production advantage in world dairy markets, it will be increasingly likely to compete head-to-head with the US in coming years, Hunt warned.

“Maintaining Australia’s edge in post-farmgate processing and marketing will be crucial to sustaining returns on fram,” he said.

News reports that the United States' Cooperatives Working Together (CWT) is to increase export subsidy support to US$60 million, is a misdirection of voluntary farmer levies in the eyes of Federated Farmers of New Zealand.

"We need to clear this has nothing to do with the United States Government," says Willy Leferink, Federated Farmers dairy chairperson.

"Cooperatives Working Together is a voluntary producer-funded national program developed by America's National Milk Producers Federation. While designed to assist family farms, New Zealand's farmers know from bitter experience that programmes like this actually hurt family farms.

"You end up maximising energy to get a subsidy instead of listening to markets.

"It also means the United States' taxpayer is paying twice over. The multi-year United States' Farm Bill, now in the Houses of Congress, is costed at something like US$1 trillion. What CWT is doing is cross-subsidising exports through what US consumers are paying domestically.

"While it may be voluntary for producers, it is less voluntary for US domestic customers.

"Money like this would be far better invested in helping dairy farmers adapt systems to a no-subsidy future. Farming is a business after all. In that regard Federated Farmers would be pleased to work with US farming groups to show how we have adapted and evolved.

"There is plenty of scope for us all but that must be based on the market place being an even playing field, Leferink says.

Rabobank Australia and New Zealand country banking division head Neil Dobbin has been appointed to run Rabobank's US agri banking business, Rabo Agri Finance (RAF).

Dobbin – a veteran of 25 years with Rabobank in Australia and New Zealand, the past decade as group executive Country Banking Australia & New Zealand – has taken on the role of chief executive officer for RAF.

Rabobank Group executive board member Berry Marttin says during Dobbin's stewardship of its country banking operations in Australia and New Zealand, Rabobank had grown to become the leading food and agribusiness bank in the region.

"The business that Neil has been instrumental in developing – from its early days as the Primary Industry Bank of Australia to its position now as the leading food and agri bank in Australia and New Zealand – is the model for Rabobank's developing agricultural banking operations around the world," Marttin said.

"In addition to the quality of the bank's loan portfolio in Australia and New Zealand, the business has also developed an enviable reputation for its agribusiness expertise and client service.

"With the US such an important future growth market for Rabobank, we are delighted that Neil is transferring his very considerable skills, expertise and experience in agricultural banking to RAF to assist this business in its future success and development."

Headquartered in St Louis, Missouri, Rabo AgriFinance is one of the largest agricultural lenders in America.

With offices throughout the United States, the business offers a comprehensive suite of agricultural financial services and crop insurance to farmers and ranchers.

Rabobank Australia & New Zealand chief executive Thos Gieskes says Dobbin's US appointment demonstrated how highly valued his capabilities and achievements – and those of the local business – were internationally.

Gieskes says Dobbin will be greatly missed by his colleagues and the bank's clients across Australia and New Zealand.

"We are fortunate though that we are not losing Neil from Rabobank and that the United States will now get to benefit from his wealth of experience and expertise," he says.

The Group Executive Country Banking role will be taken over jointly by Peter Knoblanche in Australia and Ben Russell in New Zealand.

Dobbin, who has served on the board of RAF for the past two years, said he was looking forward to the opportunity to now embrace a hands-on involvement growing the US business.

"Like Australia and New Zealand, the United States is a substantial food bowl with some two million farmers and great opportunities for the agricultural sector. And just like here, American farmers are sophisticated, they adhere to best practice and utilise the best technology available.

"American farmers have many of the same issues as Australians and New Zealanders, but also many of the same opportunities. It will be very exciting to be part of Rabobank and the sector's growth in this part of the world."

“They are becoming resistant to every drug we have on the market,” says West Virginia University assistant professor of food animal production Scott Bowdridge.

“It’s a huge, huge problem.”

Haemonchus contortus, also known as red stomach worm, wire worm or barber’s pole worm, is responsible for anaemia, bottle jaw, and the deaths of infected sheep.

Bowdridge believes he has the answer to widespread anthelmintic resistant strains: St Croix hair sheep. He’s landed a US$150,000 (NZ$189,150) US Department of Agriculture National Institute of Food and Agriculture grant to research the idea.

“The St Croix can clear it themselves in five weeks after the infection. They throw everything they have at it.”

The St Croix, also known as the Virgin Island White, is believed to have descended from the hair sheep of west Africa. Some think it is a cross of the Wiltshire Horn and the native Criollo.

In 1975, 25 Virgin Island White sheep – 22 ewes and three rams – were selected in St Croix and imported into the US.

US St Croix ewes today average 54kg and rams 74kg. Lambing rate varies from 150% to 200% with two lambings a year not uncommon.

Bowdridge says they’re a tropical breed developed under constant exposure to parasites, resulting in a super-charged immune response.

The problem is they have little to no commercial value in the US at present, so he’s looking at cross-breeding with commercial breeds to see if the immune response is heritable, and to discover what it is in their genes that makes the immune system so robust.

“The St Croix sheep launch an immediate, very aggressive attack on any parasite that enters their system, and you don’t see that response in commercial breeds.”

Bowdridge is also looking for the chemical and protein signals that trigger the St Croix’s response, with a view to using the knowledge to develop a way to “wake up” domestic sheep’s immune response to barber’s pole.

If he’s successful in that, the plan is to work with private industry to develop dietary supplements that will trigger a similar boost in commercial sheep.

Barber’s pole has adapted to countries with colder winters, with scientists from Britain and Scandinavia reporting serious problems.

Bowbridge says degree of anaemia can be used as an indicator for drenching, treatment being necessary when an animal’s lower eyelid goes from blood-red to very pink or pale.

DAIRY FARMERS around the globe will ride a wave of strong but volatile prices for the next five years with markets driven by steady annual growth in demand around 2.5%.

Despite apparent sustained high prices, farm margins are set to remain under pressure with most farmers earning only a modest return on assets at best.

This was the big picture presented at one of the major dairy farm shows in the US last month at the World Ag Expo in Tulare, California.

The massive dairy trade show drew farmers from across North America and around the world to assess the latest and greatest in technology and attend a range of specialist seminars.

A senior agribusiness analyst with Rabobank, James De Jong, says strong demand growth had seen a convergence of prices with US farmer returns now effectively permanently above support levels and closely aligned with markets in Oceania.

Demand growth for milk powders in Asia was now the key dairy market driver and would continue to be the dominant influence in the medium turn as populations and incomes grew.

The sinking US dollar was making American dairy farmers more competitive, with the result that US dairy exports had risen sharply, to above 8% of production.

While US milk powders had traditionally traded at a discount, farmers were exporting more to cash in on unfilled demand. The major export products, whey and milk powder, were now both now running above 450,000 tonnes a year.

De Jong was more pessimistic about the global cheese market, still dominated by Western culture.

"Markets for cheese in the West are mature and consumption is declining. The cheese market will underperform with uneven prices and only modest demand growth in Asia," he says.

In the US, farmer returns were under pressure, particularly in high-cost intensive dairy regions such as California. Farmers were also facing increasing regulatory and environmental compliance costs.

Corn prices were at historic highs and there was no prospect of the cost of milk production coming down.

"The price of milk will have to stay at a relatively high level if production is to match growing global demand," De Jong says.

"There is no going back to levels where market intervention prices kick in. But farmers will have to learn to live with price volatility and develop a strategy to cope.

"High production costs will keep margins under pressure."

China will continue to be a major driver of world demand, even though there has been a slowing in demand.

Attempts to ramp up domestic production in China, including the construction of large intensive dairies, have met with mixed success.

Demand growth in India will continue to be restrained by high tariffs and does not present a huge growth opportunity in the short term.